Of course Democrats want huge tax increases. Tax increases cause expanding deadweight loss and ultimately contract economic growth. Democrats clearly want to crash the economy while President Trump is in office to make sure that he’s a one-term President only.
Warren Buffett let the cat out of the bag today on why the rich and powerful are not selling stocks. Warren Buffett told CNBC today that he’s not selling and booking profits in his positions until he finds out what the capital gains tax rate will be under a Trump tax cut. Think about it. The difference could be millions of dollars in lost profit if stocks are sold before the end of the year and before Trump’s tax cut hits in 2018. Continue reading “Warren Buffett Let Cat Out of Bag On Why Rich Are Not Selling Stocks”
Republicans have officially given up on trying to pass a border adjustment tax to even the playing field with our trading partners. The Retail Industry Leaders Association celebrated the news and said they are now ready to get on-board with the President’s tax reform.
The retail sector, and stock traders, won a significant victory Thursday when the White House and Congressional leaders announced that they have set aside a border adjustment tax that could have raised the cost of imported products by up to 20 percent.
Republican leaders said on Thursday that the proposed border-adjusted tax won’t be part of negotiations on how best to overhaul the U.S. tax code, giving a victory to retailers’ and stock traders that had opposed the measure. Retailers said that a BAT would be passed on to consumers.
For stock traders, this is a big win because 75% of GDP comes from consumer spending at the retail level. A border adjustment tax basically would play out as a consumption tax which would reduce consumer spending. You raise taxes and can do things like a border adjustment tax in a strong economy with runaway inflation where you’re trying to cool off the economy and so fiscal and monetary policy support each other. In a weak economy with flat wages and struggling consumers, you lower taxes and do things that increase consumption. We are in a weak economy and so a border adjustment tax right now would have hurt the economy and thus job growth.
Border Adjustment Tax Impact On Consumers
Some traders told me that if costs of a BAT were passed on to consumers then that would be inflationary and help the Federal Reserve achieve their 2 percent target. The problem with that logic is that what if it didn’t work? I mean it’s only inflationary if someone is willing and able to pay the higher prices caused by a BAT. What if consumption instead contracts as a result of higher prices? If demand contracts then supply contracts and that would work against supply-side economics.
A statement Thursday from House Speaker Paul Ryan, Ways and Means Chairman Kevin Brady, White House economic advisor Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch said that due to the unknowns associated with the border adjustment tax, they had decided to set this policy aside to be able to advance tax reform.
For stock traders this is a big win as tax reform will lower our capital gains tax and allow us to invest and trade even more. Anything that advances tax reform is a win for traders. We are very close to going into a Bear market unless President Trump’s agenda moves forward IMO.
BAT was holding things up and we buried that several times and it kept coming back… Small businesses are going to get a tax cut, that was a very important part of the Trump plan. They talked about expensing and will have unprecedented write-offs, this is very important from a cost of capital viewpoint… Repatriation is going to be in here… Unlike health care, on taxes the Trump Administration had its act together and secondly, the Republican party basically agrees with itself.
Pitched as a major revenue source in a Republican-backed tax reform program, the border adjustment tax was touted as a key to returning manufacturing jobs to the U.S. by making imported products less competitive.
Ryan and Brady, who spent over a year championing the border adjustment tax, told Republicans prior to the statement’s release that the concept would no longer be part of tax-legislation negotiations.
Target called the leaders’ joint statement a step ahead for tax reform.
By eliminating the BAT, the way has been cleared for swift action on a middle-class tax cut which will put more money in the wallets of the American taxpayer.
I’m so happy to hear that Speaker Paul Ryan and Ways and Means Committee chairman Kevin Brady have decided to set the border adjustment tax aside and not include the controversial tax in tax-legislation negotiations. I think we finally have a chance at the first comprehensive tax reform in more than 30 years. However it leaves a question as to how to pay for these tax cuts. The BAT would have raised more than $1 trillion over a decade, according to estimates. A BAT would have helped pay for tax cuts for everybody. The problem though is that with a BAT included in tax-legislation negotiations, there’s no way tax-legislation would have passed. It was a catch 22.
Without BAT revenue, it is going to be more difficult for Republicans to keep the tax cuts permanent and to produce the kind of tax cuts that President Donald Trump has promised. Under the budget rules that GOP leaders plan to use, any tax-legislation changes that increase the deficit can only be temporary.
I think that the Federal Reserve should sell-off its balance sheet and use that money to send to the Treasury to pay for tax cuts. Have the Federal Reserve do something that’s good for the American people and main-street instead of always focusing on what’s good for Wall Street. We could corner the debt on the balance sheet of the Federal Reserve instead of the Federal Reserve spending our tax dollars and then leaving the debt cornered with the public. I’m just throwing that idea out there. That’s what we have to do. We need to come up with creative and alternative ways of paying for big permanent tax cuts.
Congressional tax writers will need to consider multiple ways of raising revenue to pay for tax cuts from various businesses by closing loopholes.
Here’s an idea. Let’s push NASA to advance the space-mining industry and then any proceeds gained from NASA mining an asteroid would go to pay for tax cuts. Just one asteroid mined could be worth trillions of dollars in tax cuts.
If you have any creative ideas for how to pay for a big permanent tax cut, leave your comments below.
A powerful catalyst for some stocks will be the big tax cut coming by the end of the year or early next year. The idea is to find stocks to buy of companies that are paying the highest in income taxes as these are the companies that will benefit the most when taxes are lowered.
The way this catalyst works is that going into next year, I forecast that we will get some kind of tax reform and tax cuts. Therefore companies that are currently paying high tax rates will have positive earnings revisions as a result of a big Trump tax cut.
Stocks to Buy
According to 2015 taxes, Amazon has one of the highest tax rates of any company. The company paid a Federal tax rate of 31.5%. Big tax cuts will impact Amazon in a big way. Amazon is my favorite of the top stocks to buy for future tax cuts.
AMZN presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 998.31. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 983.11, a stop order could be placed below this zone.
In 2015, Facebook paid a Federal tax rate of 78.9%. Facebook disclosed in early 2016 that it could owe billions due to an IRS investigation into the way it moved assets to an Irish subsidiary to avoid higher taxes.
The IRS tax penalty could total $3 billion to $5 billion, plus interest, according to a Facebook filing with the Securities and Exchange Commission.
FB also presents a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 155.28. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 151.81, a stop order could be placed below this zone.
#3. Walt Disney
Disney paid a 2015 Federal tax rate of 33.2% and is one of my least favorite of the stocks to buy because of its current downtrend.
Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 104.34. Right above this resistance zone may be a good entry point.
#4. Altria Group
Altria paid a 2015 Federal tax rate of 29.4% and again is one of my least favorite stocks because of its chart.
Altria Group’s price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first.
President Trump has honored his campaign promise to pull the US out of these globalist run bureaucracies that tax Americans in the name of bad effects of climate change (see Washington Post link above). You go honeybadger Trump! Trump supporters finally have something to be happy about again.
Effects of Climate Change, Who Cares?
We all want a clean environment for ourselves and future generations but Democrats under the Obama Administration destroyed our economy and middle class in an attempt to control the effects of climate change. With $20 trillion in debt and most Americans struggling just to keep a roof over their heads and food on the table, it’s criminal that US citizens are taxed and those tax dollars are sent to a non-elected globalist run bureaucracy of socialists whose goal is to create a one-world order.
The message is not that we don’t care about the environment. The message is that America has been run into the ground by decades worth of rule under Republican and Democrat administrations that milked the US tax payer for hundreds of billions of dollars while crony environmental capitalists like Elon Musk made a fortune. The message is that free handouts from America are over because we are on the verge of bankruptcy after decades of high taxes and jobs shipped offshore to places like Mexico and China.
President Trump will announce the position of the U.S. on climate change today. This is huge folks. The globalists have used the fear of environmental pollution to take billions of US tax payers money. Will President Trump break his campaign promise to get out of the Paris agreement, or will he move to the left to appease globalists at the expense of Americans?
The Globalist Climate Change Agenda
The Democrats should have done a better job managing the economy and the national debt instead of taking us to the brink of bankruptcy. Now, with the country in $20 trillion in debt and middle-class Americans struggling to pay the bills, it’s stupid to give so much money away to the globalist agenda in the name of climate change IMO.
Let’s help out Americans by getting the economy going and wages up, we can always revisit this issue a few years from now when we have the money and means to get back into the Paris agreement.